What is a wage base?
Social security is a federal program of the United States, which guarantees retirement workers. Paying taxes from social security during a career will become eligible for paying income after retirement. The annual taxes that each person pays into the system is based on the percentage of its income. Social Security Wage Base is the maximum amount of annual income subject to social security taxes; People who earn more than the Social Security Base, usually do not have to pay this type of excessive income tax.
Every year, the US government can make changes to the social security wage base. The decision to do is often based on the state of the economy; For example, in the recession, the wage base can be frozen to allow people to maintain more of their earned income. However, the rate has never dropped since the establishment of the wage program. In the middle of the 21st century, some economists predict that the base of wages will increase by up to 40% of the aboveOMU century.
In 2009–2011, the basic wage level was frozen to $ 106,800 in USD (USD). The income obtained for this amount is not taxed for social security, although it can be taxed on programs such as Medicare and other income taxes. The new law in 2011, called a reduction in payroll sheets from 2011, further reduced employees' contributions to social security to a maximum of 4.2% of the wage base, and at the same time required employers to remain 6.4% at the same previous rate. People who are self -employed also benefit from this tax reduction, with a maximum taxable rate of 10.6%. However, a reduction in wages of 2011 wages is likely to become a permanent law and can only apply for one year.
One complicated problem regarding social security wage base includes people who work more than one job. If a person earns $ 70,000 in one work and 40000 USD on the second, he will not be taxed to the maximum amount in both jobs, although the total income exceeds the pay base by $ 3200. For employees, this mismatch can be corrected in the income tax forms for this year, but employers may not have a way to avoid maximum employee contributions.
Although it may seem somewhat unfair that people who earn less than the basic limit of wages pay a higher percentage of their tax income than those who earn more than the limit, some economists claim that the system is fair. People who produce more than wages do not receive higher social security benefits and may be under higher pressure to maximize personal savings. However, with the Social Security system, which is considered to be a risk of bankruptcy, and when most American workers who are deep below the basic wages of wages are often mentioned arguments for a major increase in the basic base limit.